Marathon Oil Announces $2.7 Billion Sale of Norway Business

abarrelfullabarrelfull wrote on 04 Jun 2014 20:01
Tags: det-norske europe marathon norway upstream


Marathon Oil Corporation (NYSE: MRO) announced today that it has entered into a definitive agreement with Det norske oljeselskap ASA under which Det norske will purchase Marathon Oil's wholly owned subsidiary, Marathon Oil Norge AS, for a total transaction value of $2.7 billion. After adjustment for debt, net working capital and interest on the net purchase price, Marathon Oil expects net proceeds of approximately $2.1 billion at closing. The effective date of the transaction is Jan. 1, 2014.

The companies expect to close the transaction, subject to the necessary government and regulatory approvals, in the fourth quarter of this year.

"The sale of our Norway assets advances one of our key 2014 priorities and further demonstrates our commitment to rigorous portfolio management to simplify and concentrate our business," said Lee M. Tillman, Marathon Oil's president and CEO. "Since becoming an independent E&P company in 2011, Marathon Oil has executed $6.2 billion of strategic divestitures repositioning the portfolio for future growth and profitability. The disciplined allocation of capital to opportunities that can deliver long-term growth at higher returns and improved margins is a strategic imperative.

"With respect to our plans for the re-deployment of proceeds, we remain resolute in our commitment to capital discipline," Tillman emphasized. "Marathon Oil has a deep inventory across three high-quality U.S. resource plays with expanding opportunities to further accelerate activity. Such organic growth will be our first priority for additional capital allocation, with the balance available for share repurchases under our remaining $1.5 billion board authorization and general corporate purposes.

"I'd also like to recognize the professionalism and dedication of our Norway employees for their significant contributions over the years in building a world-class operation on the Norwegian Continental Shelf. Det norske recognizes the value of not only the assets, but also the competencies and capabilities of the people who have driven Marathon Oil's success in Norway," Tillman said.

The sale includes the Marathon Oil-operated Alvheim floating production, storage and offloading (FPSO) vessel, 10 Company-operated licenses and a number of non-operated licenses on the Norwegian Continental Shelf in the North Sea. Full-year 2013 net production in Norway averaged approximately 80,000 barrels of oil equivalent (BOE) per day.

U.K. Business Retained

After careful consideration of all bids, the Company received no acceptable offer for its U.K. North Sea business and has elected to retain those assets.

"From the beginning of this marketing process, we stated we would only sell our U.K. North Sea business if we received an offer that appropriately valued these assets," Tillman said. "Accordingly, we will continue to operate this business as we always have - with a focus on our Company's long-held values and commitment to safe and responsible operations, and in a manner that maximizes shareholder value. We have an outstanding team in the U.K., and I'm proud of their continued contributions during this marketing period. Moving forward, I have confidence they will continue to drive value for the Company."

Scotia Waterous served as financial advisor to Marathon Oil in this transaction.

Marathon Oil Corporation is an international exploration and production company. Based in Houston, Texas, the Company had net proved reserves at the end of 2013 of approximately 2.2 billion barrels of oil equivalent in North America, Europe and Africa. For more information, please visit the website at http://www.marathonoil.com.

Background

At year-end 2013, Marathon Oil operated nine licenses and held interests in six nonoperated licenses on the Norwegian Continental Shelf in the North Sea.

  • Alvheim (PL 036 C, 088 BS, 203) — Marathon Oil Norge is the operator of the Alvheim area (65 percent working interest), which was developed using a purpose-designed FPSO. Oil is transported via shuttle tanker and natural gas is transported to the U.K. Scottish Area Gas Evacuation (SAGE) system. Alvheim first production was in June 2008.
  • Bøyla (PL 340) — Marathon Oil Norge has a 65 percent working interest in the Bøyla discovery. Bøyla will be developed as a subsea tieback via a 17-mile pipeline to the Alvheim Field. The planned production start-up is expected in early 2015.
  • Vilje (PL 036 D) — The Vilje Field (46.9 percent working interest and operator) ties back to the Alvheim FPSO via a 12-mile pipeline. Vilje commenced production in August 2008. Vilje Sør will be developed as a subsea tieback to the Vilje Field. Production start-up is expected in the first half of 2014.
  • Viper/Kobra — The Viper/Kobra discovery (65 percent working interest), is in the immediate vicinity of the Volund Field. It is being evaluated as a possible tieback to the Alvheim complex of the Viper discovery as a combined development with the 1997 Kobra discovery.
  • Volund (PL 150 and PL 150BS) — We also operate Volund (65 percent working interest), the second field developed as a subsea tieback to the Alvheim FPSO.
  • Exploration — As of year-end 2013, Marathon Oil held interests in more than 280,000 net acres (approximately 1.1 million gross) offshore Norway.

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